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Class and Collective Action Waivers WERE Unenforceable In Employment Agreements

Note:  The law has been changed and therefore this posting no longer states the current state of the law.

 

The Seventh Circuit decided Lewis v. Epic Systems on May 26, 2016. This is a significant case that holds that class action and collective action waivers in the arbitration context are unenforceable in employment lawsuits. Many employers require employees to waive their right to bring claims in court and instead they must pursue arbitration. These agreements also typically require that the cases be arbitrated on an individual basis and not as a class action or collective action. Many law firms are reluctant to represent a single employee in arbitration. (Although, the employment rules for the American Arbitration Association have some useful features such as a low cost and a quick result).

The Seventh Circuit found that under the NLRA’s Section 7 rights to protected and concerted activity, it is illegal to require an employee to waive these rights. The Court held:

Congress was aware of class, representative, and collective legal proceedings when it enacted the NLRA. The plain language of Section 7 encompasses them, and there is no evidence that Congress intended them to be excluded. Section 7’s plain language controls…and protects collective legal processes. Along with Section 8, it renders unenforceable any contract provision purporting to waive employees’ access to such remedies.

As such, it appears that employees have a valuable weapon in their arsenal and can argue that employment agreements are illegal when they violate the right to join together with their fellow employees.

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